UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
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For the quarterly period ended March 31, 2003 |
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or, |
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TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
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For the transition period from to |
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Commission File Number: 0-23556 |
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NEKTAR THERAPEUTICS |
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(Exact name of registrant as specified in its charter) |
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Delaware |
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94-3134940 |
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(State of other jurisdiction of |
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(IRS Employer Identification No.) |
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150 Industrial Road |
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650-631-3100 |
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(Registrant’s telephone number, including area code) |
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Inhale Therapeutic Systems, Inc. |
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(Former name, former address and former fiscal year, if changed since last report) |
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Indicate by check mark whether the registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12B-2 of the Exchange Act). Yes ý No o
Applicable Only to Corporate Issuers
The number of outstanding shares of the registrant’s Common Stock, $0.0001 par value, was 55,690,924 as of April 30, 2003.
INDEX
PART I: |
FINANCIAL INFORMATION |
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Item 1. |
Condensed Consolidated Financial Statements – unaudited: |
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Condensed Consolidated Balance Sheets – March 31, 2003 and December 31, 2002 |
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Consolidated Statements of Cash Flows for the three-month periods ended March 31, 2003 and 2002 |
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Notes to the Unaudited Condensed Consolidated Financial Statements |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Forward - - Looking Statements
This report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “1933 Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “1934 Act”). All statements other than statements of historical fact are “forward-looking statements” for purposes of this periodic report, including any projections of earnings, revenues or other financial items, any statements of the plans and objectives of management for future operations, any statements concerning proposed new products or services, any statements regarding future economic conditions or performance and any statement of assumptions underlying any of the foregoing. In some cases, forward-looking statements can be identified by the use of terminology such as “may,” “will,” “expects,” “plans,” “anticipates,” “estimates,” “potential,” or “continue,” or the negative thereof or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements contained herein are reasonable, there can be no assurance that such expectations or any of the forward-looking statements will prove to be correct and actual results could differ materially from those projected or assumed in the forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to inherent risks and uncertainties, including but not limited to the risk factors set forth below and for the reasons described elsewhere in this periodic report. All forward-looking statements and reasons why results may differ included in this report are made as of the date hereof and we do not intend to update any forward-looking statements except as required by law or applicable regulations.
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NEKTAR THERAPEUTICS
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share information)
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March 31, 2003 |
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December 31, 2002 |
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(unaudited) |
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* |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
21,526 |
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$ |
34,879 |
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Short-term investments |
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229,986 |
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259,090 |
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Accounts receivable |
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6,775 |
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4,370 |
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Other current assets |
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12,150 |
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12,650 |
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Total current assets |
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270,437 |
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310,989 |
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Property and equipment, net |
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142,706 |
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143,452 |
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Goodwill |
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130,120 |
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130,120 |
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Other intangible assets, net |
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14,343 |
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15,470 |
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Deposits and other assets |
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6,338 |
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6,607 |
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Total assets |
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$ |
563,944 |
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$ |
606,638 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
6,593 |
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$ |
8,655 |
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Accrued research and development |
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8,071 |
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10,359 |
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Accrued general and administrative |
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4,396 |
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5,758 |
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Accrued compensation |
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7,695 |
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11,617 |
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Other accrued liabilities |
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368 |
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466 |
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Interest payable |
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4,617 |
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3,762 |
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Capital lease obligations - current |
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1,062 |
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1,008 |
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Deferred revenue |
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8,322 |
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22,040 |
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Total current liabilities |
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41,124 |
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63,665 |
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Convertible subordinated notes and debentures |
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299,149 |
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299,149 |
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Capital lease obligations - noncurrent |
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31,488 |
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31,862 |
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Other long-term liabilities |
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2,796 |
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3,159 |
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Accrued rent |
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2,052 |
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2,033 |
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Commitments and contingencies |
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— |
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— |
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Stockholders’ equity: |
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Preferred Stock, 10,000 shares authorized |
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— |
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— |
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Convertible Series B, $0.0001 par value: 40 shares designated; 40 shares issued and outstanding at March 31, 2003 and December 31, 2002, respectively. Liquidation preference of $40,000 at March 31, 2003 and December 31, 2002. |
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40,000 |
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40,000 |
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Common stock, $0.0001 par value; 300,000 authorized; 55,676 shares and 55,553 shares issued and outstanding at March 31, 2003 and December 31, 2002, respectively. |
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6 |
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6 |
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Capital in excess of par value |
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715,273 |
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714,680 |
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Deferred compensation |
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(128 |
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(239 |
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Accumulated other comprehensive income |
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1,478 |
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1,668 |
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Accumulated deficit |
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(569,294 |
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(549,345 |
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Total stockholders’ equity |
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187,335 |
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206,770 |
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Total liabilities and stockholders’ equity |
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$ |
563,944 |
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$ |
606,638 |
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(*) The balance sheet at December 31, 2002 has been derived from the audited financial statements at that date which are included in our Form 10-K for the year ended December 31, 2002 as filed with the Securities and Exchange Commission and as amended. This balance sheet does not include all the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.
See accompanying notes.
3
NEKTAR THERAPEUTICS
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share information)
(unaudited)
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Three-Months Ended March 31, |
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2003 |
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2002 |
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Revenue: |
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Contract research revenue |
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$ |
18,393 |
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$ |
21,301 |
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Product sales |
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7,135 |
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5,445 |
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Total revenue |
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25,528 |
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26,746 |
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Operating costs and expenses: |
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Cost of goods sold |
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4,622 |
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1,890 |
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Research and development |
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32,141 |
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41,927 |
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General and administrative |
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5,178 |
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5,381 |
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Amortization of other intangible assets |
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1,127 |
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1,127 |
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Total operating costs and expenses |
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43,068 |
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50,325 |
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Loss from operations |
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(17,540 |
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(23,579 |
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Other income/(expense), net |
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119 |
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(88 |
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Interest income |
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1,624 |
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2,800 |
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Interest expense |
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(4,152 |
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